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the Reconstitution of its Afloat Prepositioned Stocks' which was
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February 8, 2008:
The Honorable Ike N. Skelton:
Chairman:
Committee on Armed Services:
House of Representatives:
The Honorable Solomon P. Ortiz:
Chairman:
Readiness Subcommittee:
Committee on Armed Services:
House of Representatives:
Subject: Defense Logistics: Army Has Not Fully Planned or Budgeted for
the Reconstitution of Its Afloat Prepositioned Stocks:
At various stages throughout the current operations in Iraq and
Afghanistan, the Army has withdrawn equipment from its stored, or
prepositioned, stock sets around the world, as well as from its afloat
stocks, thus depleting a large portion of its prepositioned
stocks.[Footnote 1] The Army prepositions equipment at diverse
strategic locations in order to field combat-ready forces in days
rather than the weeks it would take if equipment had to be moved from
the United States to the location of the conflict. The Army
Prepositioned Stocks (APS) program supports the National Military
Strategy and is an important part of the Department of Defense's (DOD)
overall strategic mobility framework. The APS program depends on
prepositioned unit sets of equipment and sustainment stocks to enable
troops to deploy rapidly and train with prepositioned equipment before
beginning combat operations. As we testified in January 2007 and March
2006, however, sustained continuing operations have taken a toll on the
condition and readiness of military equipment, and the Army faces a
number of ongoing and long-term challenges that will affect both the
timing and cost of equipment repair and replacement, particularly to
its prepositioned stocks.[Footnote 2]
Over the past several years, GAO and other audit agencies have reported
on numerous long-standing problems facing DOD's and the Army's
prepositioning programs, including a lack of centralized operational
direction; unreliable reporting on the maintenance condition of
equipment; equipment excesses at some prepositioned locations; and
systemic problems with requirements determination and inventory
management. In September 2005, we recommended that DOD develop a
coordinated departmentwide plan and joint doctrine for the department's
prepositioning programs.[Footnote 3] In February 2007, we reported that
while the Army expected to finalize its implementation plan for
prepositioning stocks[Footnote 4] by December 31, 2006, DOD would not
complete its departmentwide strategy before mid-April 2007.[Footnote 5]
We recommended that the Secretary of Defense direct the Secretary of
the Army to take steps to synchronize the Army's prepositioning
strategy with the DOD-wide strategy, to ensure that future investments
made for the Army's prepositioning program would align with the
anticipated DOD-wide prepositioning strategy. In addition, the John
Warner National Defense Authorization Act for Fiscal Year 2007[Footnote
6] required the department to establish a departmentwide prepositioning
strategic policy by April 2007.
The 2007 Authorization Act[Footnote 7] also directs the Secretary of
Defense to take necessary steps to ensure that financial resources are
provided to reconstitute equipment and materiel in prepositioned stocks
in accordance with the requirements under the APS Strategy 2012 or
subsequent strategy. Additionally, the act directs the Secretary to
include in the budget justification materials a clear and detailed
description of the amounts requested for reconstitution of equipment
and materiel in prepositioned stocks. The National Defense
Authorization Act for Fiscal Year 2008[Footnote 8] directs DOD to
submit an annual report on the status of materiel in the prepositioned
stocks, including the department's timeline and funding requirements
for reconstituting shortfalls in prepositioned stocks. The act also
directs DOD to report on any operations plans affected by any shortfall
in the prepositioned stocks and any action taken to mitigate any risk
that a shortfall may create.
The APS program encompasses three categories of stocks stored at land
sites and aboard prepositioning ships: combat brigade sets,[Footnote 9]
war reserve sustainment stocks,[Footnote 10] and operational project
stocks.[Footnote 11] APS equipment sets are referred to according to
numerical designations of 1 through 5, corresponding to their
locations. The Army has primarily depended on two APS sets for
operations in Iraq and Afghanistan--APS-3, which is equipment
prepositioned on ships, or "afloat"; and APS-5, which is the equipment
prepositioned in Southwest Asia. APS-5 has been depleted and
reconstituted several times over during the course of these operations.
In December 2006, the Army decided to remove equipment and supplies
from its APS-3 prepositioned sets stored on ships in order to
accelerate the creation of two additional brigade combat teams[Footnote
12] by April 2008.[Footnote 13] Army officials determined that using
equipment from other APS sets, such as APS-4 and APS-5, to satisfy
these equipment requirements was not a viable option because of the
risks involved in Northeast Asia and ongoing operations in Southwest
Asia. Some members of Congress have expressed concerns, however, about
the potential effect of the Army's decision to deplete the equipment
stocks from these ships and the risk that DOD may be unprepared for a
conflict elsewhere in the world. Prepositioned stocks are critical
enablers to DOD's military strategy, and they help ensure that the
military has materiel and equipment available for rapid deployment
should future conflicts erupt.
At the request of the Chairman, House Committee on Armed Services, and
the Chairman, Subcommittee on Readiness, House Committee on Armed
Services, we have reviewed the above issues. For this report, our
objectives were to identify (1) the Army's strategy for reconstituting
the prepositioned equipment sets worldwide, and how this strategy fits
into broader DOD-wide strategies; and (2) the extent to which the
Army's APS reconstitution strategy is reflected in current defense
budget requests and cost estimates for restoring the prepositioned
equipment sets to a posture that fully supports DOD's strategy for
future employment. On August 14, 2007, we briefed your offices on our
preliminary observations. Subsequent to this briefing we obtained
additional information from the Army and DOD regarding the Army's
prepositioning strategy and the status of the DOD-wide strategy. This
report updates and summarizes the information discussed in that
briefing. You also asked us to identify (1) what factors the Army and
DOD considered in deciding to remove the Army's prepositioned equipment
sets afloat to accelerate the creation of two additional brigade combat
teams; and (2) DOD's and the Army's process for analyzing and
mitigating risks in the event that another conflict occurs elsewhere.
These two additional objectives will be addressed in a separate
classified report.
Our audit work focused on the Army's strategy for reconstituting the
prepositioned equipment sets worldwide and how this strategy fits into
broader DOD-wide strategies; and the extent to which this strategy is
reflected in current defense budget estimates and cost estimates for
restoring prepositioned equipment. To identify the Army's strategy and
determine how this strategy fits into broader DOD-wide strategies, we
interviewed officials from key DOD and Army organizations, including
the Office of the Under Secretary of Defense, Logistics and Materiel
Readiness Program Support; Office of the Under Secretary of Defense,
Acquisition, Technology, and Logistics; the Army Materiel Command; the
Army Office of Program, Analysis, and Evaluation; Office of Army Deputy
Chief of Staff, Logistics; and the Office of Army Deputy Chief of
Staff, Force Development. To determine how the Army's strategy is
reflected in current defense budget estimates and cost estimates for
restoring prepositioned equipment, we reviewed cost estimates and
fiscal year 2007 and fiscal year 2008 budget requests provided by the
Army Budget Office, and we discussed how reconstitution strategies are
reflected in future budget requests with officials from the Army Office
of Program, Analysis, and Evaluation; Office of Army Deputy Chief of
Staff, Logistics; and Office of Army Deputy Chief of Staff, Force
Development. We conducted this performance audit from March 2007
through February 2008 in accordance with generally accepted government
auditing standards. Those standards require that we plan and perform
the audit to obtain sufficient, appropriate evidence to provide a
reasonable basis for our findings and conclusions based on our audit
objectives. We believe that the evidence obtained provides a reasonable
basis for our findings and conclusions based on our audit objectives.
Findings:
Army officials stated that its worldwide APS equipment sets, including
APS-3, would be reconstituted in synchronization with the Army's
overall equipping priorities when properly funded and in accordance
with the official Army worldwide APS reconstitution strategy known as
Army Prepositioned Strategy 2015 (APS Strategy 2015).[Footnote 14]
According to DOD officials, the Army's equipping priorities will be
based on evolving conditions and operations such as the availability of
equipment and duration of operations in Iraq and Afghanistan, for
example. As of December 2007, the Army had not established its overall
equipping priorities. Additionally, the Army's APS reconstitution
strategy is not correlated with a DOD-wide APS strategy, because,
according to DOD officials, a DOD-wide prepositioning strategy does not
exist. DOD officials explained that the services are responsible for
equipping strategies and that the Joint Staff, consistent with current
policy, conducts assessments of the services' prepositioned programs to
determine their relationship within the DOD-wide strategic context. DOD
officials do not believe additional synchronization of strategies is
required. According to DOD, the War Reserve Materiel Policy[Footnote
15] provides ample policy guidance on war reserve materiel requirements
and war reserve materiel positioning while the allocation process is
outlined in the Joint Strategic Capability Plan.[Footnote 16] DOD
officials believe publication of the War Reserve Materiel Policy and
Joint Strategic Capability Plan satisfies the congressionally mandated
requirement contained in the John Warner National Defense Authorization
Act for Fiscal Year 2007.[Footnote 17] Nonetheless, as we recommended
in our September 2005[Footnote 18] and February 2007 reports,[Footnote
19] a DOD-wide strategy would set direction and a shared foundation for
the services' prepositioning programs. Synchronizing a DOD-wide
strategy with the Army's prepositioning strategy would ensure that
future investments made for the Army's prepositioning program would
align with the anticipated DOD-wide strategy. Without a DOD-wide
prepositioning strategy, DOD risks inconsistencies between the Army's
and the other services' prepositioning strategies, which may result in
duplication of efforts and resources. We continue to believe a DOD-wide
strategy is needed in addition to broad strategic guidance.
We could not determine the extent to which the Army's APS
reconstitution strategy is reflected in current defense budget requests
and cost estimates for restoring the prepositioned equipment sets to a
posture that fully supports DOD's strategy for future employment
because Army officials could not provide a breakdown of the $3.3
billion cost estimate to reconstitute APS-3 requested in the fiscal
year 2007 supplemental budget. Army officials also stated that full
implementation of APS Strategy 2013[Footnote 20] would total somewhere
between $10.6 billion and $12.8 billion throughout the 2008 Program
Objective Memorandum (POM), which includes requests for 5 years beyond
the current fiscal year 2008 budget request. The fiscal year 2008 POM
estimates include about $3.6 billion for procurement; $4.2 billion for
operations and support; and $2.8 billion for war reserve secondary
items. Army officials stated that the fiscal year 2008 POM does not
include requests for APS reconstitution costs, but that the fiscal year
2010 POM will likely include a request for APS reconstitution.
According to Army officials, the fiscal year 2007 supplemental APS
budget funded the removal of equipment from APS-3. However, the Army's
fiscal year 2008 budget requests for the care and maintenance of this
equipment were not adjusted to reflect the fact that the equipment was
no longer included in the prepositioned set. Furthermore, future budget
requests for reconstitution of the APS equipment sets are difficult to
distinguish because they may also include funding for other equipment-
related budget requests, including Army modularity,[Footnote 21]
modernization,[Footnote 22] and equipment reset,[Footnote 23] or
requests to fill equipment shortages. According to Army officials, the
Army programming and budget process does not treat APS funding as a
discrete entity. Funds are often moved into and out of APS operation
and maintenance accounts depending on Army funding priorities. Because
operation and maintenance funds are fungible, the Army can move funds
to respond to changes in readiness and operational environments. Army
officials stated that separating APS requirements from other
requirements in budget requests is complicated, and they do not plan to
track APS execution separately. In addition, under the Army Force
Generation (ARFORGEN) model,[Footnote 24] once the equipment from APS-
3 has been removed from the ships, the equipment becomes part of the
Army's reset and training pool.[Footnote 25] Equipment within this pool
will be reset and, accordingly, funded with reset funding. Without
clearly identifying APS reconstitution requirements, however, the Army
cannot ensure that it can provide sufficient funding, and Congress
cannot be assured it has the visibility it needs for its decision-
making process.
We are not making any recommendations at this time as DOD has not yet
implemented the recommendation from our September 2005 report[Footnote
26] to develop a coordinated departmentwide plan and joint doctrine for
the department's prepositioning programs. While DOD partially concurred
with our prior recommendation to develop a coordinated DOD-wide plan,
it had not done so as of December 21, 2007. We continue to believe our
recommendation has merit and that DOD should develop a departmentwide
prepositioning plan.
Agency Comments:
While DOD did not provide any overall reactions to a draft of this
report, they did provide written technical comments. We have
incorporated those comments throughout the report as appropriate.
We are sending copies of this report to the appropriate congressional
committees, the Secretary of Defense, and the Secretary of the Army. We
will also make copies available to others upon request. In addition,
this report will be available at no charge on the GAO Web site at
[hyperlink, http://www.gao.gov].
If you or your staff has questions, please contact me at (202) 512-8365
or solisw@gao.gov. Contact points for our Offices of Congressional
Relations and Public Affairs may be found on the last page of this
report. GAO staff who made major contributions to this report are
listed in enclosure I.
Signed by:
William M. Solis:
Director:
Defense Capabilities and Management:
[End of section]
Enclosure I: GAO Contact and Staff Acknowledgments:
GAO Contact: William M. Solis, (202)512-8365 or solisw@gao.gov:
Acknowledgments: In addition to the contact named above, David A.
Schmitt, Assistant Director; Donna M. Rogers; Christopher Turner; and
Cheryl Weissman made key contributions to this report.
[End of section]
Footnotes:
[1] The Army prepositions stocks primarily at land sites in Europe,
Northeast Asia, Southwest Asia, and aboard ships afloat near Guam and
Diego Garcia. During the initial stages of Operation Iraqi Freedom, the
Army primarily used prepositioned stocks afloat (APS-3) and from
Southwest Asia (APS-5).
[2] GAO, Defense Logistics: Preliminary Observations on the Army's
Implementation of Its Equipment Reset Strategies, GAO-07-439T
(Washington, D.C.: Jan. 31, 2007), and Defense Logistics: Preliminary
Observations on Equipment Reset Challenges and Issues for the Army and
Marine Corps, GAO-06-604T (Washington, D.C.: Mar. 30, 2006).
[3] GAO, Defense Logistics: Better Management and Oversight of
Prepositioning Programs Needed to Reduce Risk and Improve Future
Programs, GAO-05-427 (Washington, D.C.: Sept. 6, 2005).
[4] The revised Army Prepositioned Stock (APS) Strategy 2013 superseded
Army Prepositioned Stock (APS) Strategy 2012.
[5] GAO, Defense Logistics: Improved Oversight and Increased
Coordination Needed to Ensure Viability of the Army's Prepositioning
Strategy, GAO-07-144 (Washington, D.C.: Feb. 15, 2007).
[6] Pub. L. No. 109-364, §351 (2006). See also 10 U.S.C. §2229 and the
accompanying note.
[7] Pub. L. No. 109-364, §323 (2006).
[8] The National Defense Authorization Act for Fiscal Year 2008, Pub.
Law No. 110-181, § 352 (2008), was passed as we prepared to issue this
report.
[9] Combat brigade sets are designed to support 3,000 to 5,000 soldiers
and include heavy weaponry such as tanks, support equipment such as
trucks, and spare parts to support the early stages of a conflict.
[10] War reserve sustainment stocks include items to sustain the battle
until stocks can be resupplied and war reserve secondary items such as
rations, clothing, medical supplies, and repair parts.
[11] Operational project stocks include authorized materiel above unit
authorizations designed to support Army operations and contingencies
and equipment and supplies for Special Forces operations and mortuary
operations, among others.
[12] Brigade combat teams are combat maneuver brigades that will have a
common organizational design and are intended to increase the
rotational pool of ready units. Modular combat brigades have one of
three designs--heavy brigade, infantry brigade, or Stryker brigade.
[13] The April 2008 deployment date is based on the Army's overall
rotation schedule for moving units in and out of Iraq.
[14] In November 2007, the Army leadership approved APS Strategy 2015
which superseded APS Strategy 2013. APS Strategy 2015 is similar to APS
Strategy 2013 but also includes a Light Infantry Battalion and some
Motorized Augmentation Sets.
[15] DoDD 3110.6, War Reserve Materiel Policy (Nov. 9, 2000).
[16] The Joint Strategic Capability Plan apportions resources to the
combatant commanders. It covers a 2-year period and provides strategic
guidance to the combatant commanders, Joint Chiefs of Staff members,
and heads of defense agencies and departments. This is a classified
document, which we were unable to review.
[17] Pub. L. No. 109-364, §351 (2006). See also 10 U.S.C. §2229 and the
accompanying note.
[18] GAO-05-427.
[19] GAO-07-144.
[20] Updated budget requests for APS Strategy 2015 were not available
because the budget requests were still under review when the new
strategy was approved.
[21] Modularity costs are defined as the increased costs of equipment
due to changing authorizations associated with standardization of units
to the modular configuration.
[22] Modernization encompasses replacing older systems with more
capable systems.
[23] Reset is the cost to replace, recapitalize, and repair equipment
in order to restore units to a level of combat capability required for
future missions.
[24] The ARFORGEN model is designed to generate trained and ready
forces to meet global demands.
[25] Under ARFORGEN, units proceed through three pools of unit
readiness: (1) reset and train; (2) ready; and (3) available.
[26] GAO-05-427.
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